) to overweight from neutral.
Analyst Sterling Auty says fundamental strength continues and valuation is attractive. He says demand for content management continues; the company has one of the strongest pipelines in software, and has closed one large deal for the March quarter.
Auty expects 2003 operating margins to increase 500 basis points from 2002 given its strengthening leverage. He says Documentum has drafted plans for new a streamlined pricing plan to customers, alleviating the previous risk factor.
He notes shares are trading at a price-earnings-to-growth ratio of below 1.0, compared with a 1.4 average for the peer group. He sees four cents first quarter earnings per share, and 34 cents for 2003.